News from the Residential Property Investor, the bi-monthly magazine for RLA members other artilces from the April / May 04 issue RPI news archive

Agents and lenders are in bullish mood - April / May 2004

Despite warnings of doom from analysts, house prices are continuing to rise at double figure rates. The finding came from latest figures published by the Halifax and the National Association of Estate Agents (NAEA), both of whom estimate average increases in the order of 2 per cent in March.

The Halifax puts the figure at 2.2 per cent, taking the average price of a UK house through the £150,000 barrier and putting the annual rate of increase at an average of 18.5 per cent.

Quarterly figures showed the north west as having the highest rate of increase (9.7 per cent on the quarter and 29.6 per cent on the year) followed by the north (9.4 per cent and 36 per cent respectively). Scotland (1.2 per cent and 16.5 per cent), East Anglia (1.9 per cent and 9.3 per cent), and London (2.8 per cent and 9.1 per cent) had the lowest rates of growth.

There were 120,000 property transactions in England and Wales on average in each of the three months from December to February (on a seasonally adjusted basis), according to the Inland Revenue. This was 11 per cent higher than in the preceding three months and above the 114,000 monthly average over the past 10 years, 'confirming the momentum in the housing market', said the Halifax.

'Whilst the number of properties sold has risen, the stock of properties available for sale on estate agents' books has fallen, contributing to the ongoing strength of house prices. The latest figures from the Royal Institution of Chartered Surveyors (RICS) show an 11 per cent decline between October 2003 and February 2004, taking unsold stock levels very close to the lowest recorded level in May 2002'.

The latest NAEA survey of members revealed a similar picture. It reported house prices up by 2 per cent in March, making a 12 per cent increase on the year the highest rate of annual inflation for over a year. The survey also found that sellers had achieved an average 97.7 per cent of their asking price the highest since 2002. NAEA president Melfyn Williams said: 'Estate agents across the whole country are becoming much more bullish with respect to house price rises this year. In addition, buyers are having to pay even closer to asking prices to secure the properties they want, another indicator of house price rises to come.

'Recent reports of an imminent crash in the housing market have as much foundation as a house built on sand. These commentators are totally detached from the reality on the ground, where estate agents are united in predicting another year of strong price rises across the country'.

Part of the reason for the strong market was a continued shortage of properties. And although the percentage of first time buyers had fallen slightly to 16 per cent after a February high of 20 per cent, the percentage remained much higher than for the latter part of 2003. 'New buyers are not giving up on the market and are being helped by mortgage lenders offering even higher multiples of income to help them get on the property ladder', said NAEA.

London house prices were shown to be catching up again 'after a lacklustre year'. Monthly rates of inflation of 1.83 per cent were broadly in line with national figures (1.99 per cent) although the annual rate of increase, at 7.94 per cent, was still well behind the national average.

'However, London has the highest density of first time buyers (22.6 per cent), with large City bonuses and generally higher incomes enabling new London purchasers to afford higher house prices than elsewhere in the country', said the NAEA.

The optimism contrasts with a prediction from Tony Dye of Dye Asset Management that the housing boom was 'probably somewhere near the end' and that it would 'all end in tears'. The fund manager is known for having correctly predicted the decline in the stock market.

Dye predicted a 30 per cent fall in house prices over the next five years- less than the 45 per cent drop predicted by Durlachers recently.
 

other artilces from the April / May 2004 issue

• Standard response
• Agents and lenders are in bullish mood
• Landlords advised to check small print
• Landlord and agent pay for safety lapses
• Private rented sector 'stable'
• Manchester students look at becoming landlords
• Landlords leaving London market
• Local Housing Allowance to include landlord safeguards
• Landlord training
• Council threatens evictions over own delays
• In brief
• OFT calls for greater controls on estate agents
• Chancellor freezes stamp duty rates
• Pension possibilities